Money Management

Tired of falling into the same Costco spending trap? Here’s how to break free for good. [[{“value”:”

One of my favorite things about shopping at Costco is that you never know what you’re going to find. You might run in for milk, eggs, and meat only to come home with a cozy fleece jacket or awesome toy bundle for your child’s birthday.

But Costco’s rotating inventory can be a mixed bag. It’s awesome when fun new items hit the shelves, but it’s not so awesome when those extra purchases add up and bust your budget.

Trust me — it’s a trap I’ve fallen into many times. And the worst part? Costco is doing this to me on purpose.

Well, it’s not just me. One of Costco’s general strategies is to keep introducing new products, so shoppers are tempted to spend more.

Costco’s new CFO Gary Millerchip even admitted to this during the company’s most recent earnings call by saying, “You’ve heard the phrase, people come in to spend $100 and walk out with $300. That’s because our buyers and our operators do a great job in making the warehouses exciting…when {customers} come in there and do their basic shopping, they pick up a few additional items that just compel them at the time.”

But while Costco may be great at enticing people like me and you to spend more than planned, we don’t have to be victims. As a long-term Costco shopper, I’ve picked up some habits that help me avoid impulse buys. Here are some of the moves you can make to stop overspending at Costco.

1. Don’t enter any aisle that doesn’t contain an item on your shopping list

Any Costco aisle you don’t need is an aisle you shouldn’t walk through during a shopping trip. Period.

Some people like to come in, walk around, and see what’s on the shelves. One thing I have going for me is my busy schedule. When I run to Costco, it’s usually an in and out sort of deal because I need to get back to my job or another task. So that helps me stay out of aisles I don’t have to visit.

But as a general rule, you should adopt a similar strategy if you commonly make extra purchases at Costco. Otherwise, you, too, might one day find yourself saying, “This fondue pot is just what I need right now.” Spoiler alert: It’s still in the box.

2. Walk through the front of the store as quickly as possible

Costco tends to strategically place sale items at the front of the store so that when you first walk in, it’s like “Bam — gotcha.” I’ve learned to walk through that area as quickly as possible and not look too closely at what’s on sale to avoid temptation.

If you happen to spot a sale item at the front of the store you’re tempted by, at least finish your planned shopping first.

This strategy often works for me because to get back to the front of the store after filling my cart, I need to walk past the checkout aisles. Usually, when I see how long the wait is to check out (even at off-peak times, there’s always a wait), I’m motivated to just get in line rather than go back out of my way for a sale item I wasn’t planning to get in the first place.

I’ve been to many Costco locations and their layouts all tend to be similar. So chances are, if you manage to walk on by from the start, you won’t make it back to the front of the store.

3. Only bring cash

The downside of not using a credit card for Costco purchases is missing out on earning cash back. The upside is that you can’t spend money you don’t have. So if you leave your credit cards at home when you visit Costco and only bring enough cash to cover your planned purchases, you take the option to overspend off the table.

Of course, Costco prices aren’t set in stone. So if you’re going to bring cash, add a buffer. But if your normal weekly grocery haul costs $100 and you bring $120 in cash, you’re limiting your option to buy something unplanned to a large degree. And this way, if your groceries come to $107, you won’t have to put back something you needed due to not bringing enough money.

As someone who once ran into Costco for seven specific grocery items and came home with an inflatable kayak, I can sympathize with the idea of being lured into spending more than expected when shopping. But the best way to avoid being tempted to buy extra Costco buys is to limit the aisles you visit, rush through the front of the store, and, if necessary, shop only with cash.

Top credit card to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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It’s possible to overfund your savings account. Discover the drawbacks of doing this and how to better manage your money. [[{“value”:”

It’s good to have a healthy amount of money in your savings account. Everyone needs money for emergencies, for starters. You’ll probably also want to have cash set aside for big future expenses — a summer getaway, a down payment on a home, things like that.

Believe it or not, some people leave too much money in their savings account. It’s not the worst problem to have, but it is worth correcting. To understand why, here’s a look at the benefits and drawbacks of doing this.

You’ll earn plenty of interest — if you’re using a high-yield savings account

Let’s start with the good news. Interest rates are high right now, so if you have a lot of money in your savings account, you could be earning sizable interest payments each month.

“Could” is the operative word there, because not all savings accounts are paying out those high rates. The average savings account rate nationwide is just 0.45%, according to the FDIC. Some big banks still offer as little as 0.01%.

The best high-yield savings accounts, on the other hand, are offering rates in the 4%-to-5% range. The highest I’ve seen recently is 5.36%.

If your savings account has a 5% APY, then you earn about $500 in interest per year for every $10,000 in your account. Just keep in mind that rates are variable, meaning they can change. They could go down at any time, in which case you’d earn less.

You could be shortchanging your retirement

Savings accounts are well-suited for storing money you’ll need in the next few years. They’re also perfect for your emergency fund, since you can withdraw from them any time. But they’re not right for your retirement savings.

The APYs of 4% to 5% that we’re seeing right now are excellent rates for savings accounts. They’re still well below the kinds of returns you could get by investing in stocks, though.

While the stock market’s returns vary from year to year, over long periods of time, it has been one of the best ways to build wealth. Over the past 50 years, it has delivered an average return of about 10% per year.

To show what kind of difference this makes, imagine you have $25,000 in retirement savings. If you get a 5% annual return for 30 years, you’ll have $108,049. If you get a 10% annual return, you’ll have $436,235. That higher annual return results in $328,186 more wealth.

How much money should you have in your savings?

To figure out the right amount for your savings, add up what you’ll need for your emergency fund and any upcoming expenses.

It’s recommended to save at least three to six months of living expenses for emergencies. If your living expenses are $5,000 per month, then you’d want $15,000 to $30,000 in emergency savings.

As far as upcoming expenses, this is anything you’ll need to spend money on in the future, outside of your regular bills. Here are some examples:

VacationsA new carYouth sports fees for your kidsHome maintenanceProfessional training

It takes a little time to go over all your upcoming expenses and estimate how much they’ll cost. But this is a good way to be financially prepared so you don’t need to scramble or go into debt when these costs come up.

By doing this exercise, you can see if you’re leaving too much money in your savings account. If you are, consider investing some of that money via a retirement account or a taxable brokerage account.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Costco’s Executive membership is $60 more than the basic membership, but if you spend at least $3,000 a year, you earn enough to cover the fee. Learn more here. [[{“value”:”

Costco has two membership tiers to choose from: The Gold Star membership is its entry-level option. It costs $60 per year. The Executive Membership is the upgraded membership, and it costs $120.

While the Costco Executive membership appears at first glance to be the more expensive option, it is essentially free for many members. Here’s how the upgrade could end up costing many members nothing at all.

If you do this, Costco’s executive membership is effectively free

While Costco’s Executive membership costs an extra $60 per year, it can end up costing nothing in the end because of one of the key perks that it offers. That perk is 2% back on most Costco purchases except for things like gas, Costco shop cards, stamps, cigarettes, and alcohol (in some states).

The maximum 2% cash back award is $1,000, which is more than many people end up earning through the program. However, if you spend a total of $3,000 per year on eligible Costco purchases, then your 2% rewards will equal $60 for the year.

Better yet, when you spend more than $3,000 at Costco, you’ll basically get paid for upgrading to the Executive Membership. If you spend $4,000, for example, you’ll get $80 back in your annual rewards.

Will you be able to cover the cost of your Executive membership?

So, will you get a free Executive membership?

For most people, it’s pretty easy to do. The 2% back counts purchases at Costco travel, so a single trip might give you enough cash back to cover the membership upgrade.

Other big-ticket items can also get you a long way toward making back your upgrade fee. And Costco has some great perks for those who buy things like electronics or appliances at the warehouse club, including extending the manufacturer’s warranty on most items for two years, offering a 90-day return window, and providing free technical and warranty assistance services for these items.

If you’re in the market for these items and considering buying at Costco, signing up for the Executive Membership first makes good sense.

Of course, you don’t have to spend your $3,000 all at once either. If you spend just $250 a month on anything at Costco warehouse clubs — from food to paper towels to pet products — then your upgraded membership will basically be free as well.

You can get an idea of your past Costco spending by checking your credit card statements to see how much you usually buy there. You can also think ahead to any big purchases, like appliances, that might put you over the $3,000 spending threshold.

If it seems likely you’ll be able to break even for your Executive membership, then signing up for it is really an easy decision.

Top credit card to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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A car’s value depreciates over time. Here’s how dropping two types of common car insurance coverage could help drivers of older vehicles save. [[{“value”:”

Car insurance costs have skyrocketed over the last year. The average annual premium in the U.S. is now about $3,699. Some drivers pay considerably more if they have accidents on their records or less experience behind the wheel.

All motorists want to do what they can to keep their costs down. Shopping around and raising the policy’s deductible can help. But for drivers of older cars, dumping a few traditionally recommended protections could be the best way to save.

How valuable are your car insurance protections?

Some car insurance coverage is non-negotiable. Nearly all states require their drivers to have liability insurance to protect others on the road, for example. This includes bodily injury liability coverage, which pays for the victim’s medical care. Property damage liability pays for damages to the victim’s personal belongings, including their vehicle.

Most other car insurance protections are optional, though some are strongly recommended. Two of these are collision and comprehensive coverage. Collision coverage pays for repairs to the driver’s own vehicle following at-fault accidents with another driver or single-car accidents. Comprehensive coverage pays for the policyholder’s vehicle repairs following natural disasters, vandalism, theft, and more.

They’re smart investments for many drivers because they protect the policyholder from paying for their own vehicle repairs entirely out of pocket. But they’re not always a great fit for drivers of older vehicles. A car’s value depreciates over time and eventually, its collision and comprehensive coverage could become more costly than the car’s value.

When collision and comprehensive coverage are no longer worth it

The Insurance Information Institute says that collision coverage costs about $290 per year while comprehensive coverage costs about $134 per year. However, this could be an underestimation. It’s not clear what year this data is from or what vehicle make and model this is based on. Other sources place estimates of collision and comprehensive costs much higher — in some cases thousands of dollars per year.

Premiums are just one of the costs associated with collision and comprehensive coverage. Drivers will also have to pay a deductible to file one of these claims. That could cost anywhere from $100 to $2,000.

If the policyholder’s vehicle is only worth $1,000 and their collision and comprehensive deductible is $1,000 and they have a premium on top of that, it doesn’t make sense for them to keep this coverage. They’re better off saving for repairs or a new vehicle in an emergency fund in case of an accident.

Drivers can estimate the current value of their vehicle using a site like Kelley Blue Book. Compare this value to the cost of maintaining collision and comprehensive coverage. If the value of the car isn’t substantially higher, it might be worth dropping that coverage to save some money on premiums.

One final thing to note: Lenders and lessors might require drivers to have collision and comprehensive coverage on their vehicle if they have a lease or loan. This protects the lender or lessor’s investment. In this case, drivers might have to try other tactics to save money, like shopping around with several providers to see which offers the best cheap car insurance.

Even if drivers own their vehicles free and clear, it might be worth comparing rates from several providers with and without collision and comprehensive coverage to see which offers the biggest bang for your buck.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More